If I’m to interpret you correctly here, you’re saying that any FA who would take 10K/Day’s call is the type of person that has absolutely no value to add? Please confirm.
I think it was a subtle jab at me whereby ‘anyone’ who takes my call is an asshat.
Wow, I have noticed the same thing…but I think it even applies to anyone making any investment, whether it is for your own 401K or running $5billion fund multi-asset class fund. Everyone is beating the market! It’s like magic!!!
And when you tell them that you don’t believe in your own ability to beat the market and for that reason you invest in index funds, they scoff at you
They’re just trolling you bro. Seriously tho, that’s our industry. Full of advisors, their crappy cousins in better suits the private bankers, and their poorer but more self-righteous cousin the investment consultant…none of these donkeys ever shows a track record or even maintains one. So many talk about their best trades which they remember like elephants, and bad trades they forget like drunks.
I thought Greenie’s response was fantastic, but how many thoughtful guys like that are out there? You gotta endure a lot of soul-crushing calls and meetings to find them.
I think there are a lot of people who would listen, provided that you actually have a differentiator that they want. I think we can reasonably assume that your portfolios are no different that anybody else’s. And nobody cares about your price, because we can always pass that on to the client (as long as it’s not exorbitant).
So if you can’t compete on performance or price, what can you compete on? Well, there’s the advisor’s time, for example. If my time is worth $200 an hour, and you can automate something to save me two hours per week, that’s the equivalent of getting a $10k raise. That will move some people’s needle, but not others.
Perhaps your client interface is so much better than the competition that your research shows that clients are 77% less likely to leave you because they like their login/portal/whatever. That’s worth something, but it depends on how much I have to work to get it.
Maybe you can give the advisor a new toy to play with once they reach a certain threshold. EG - once I have 50 accounts on the Morningstar TAMP model, they’ll give me a free M* Advisor Workstation subscription. That’s worth $300 per month. And that’s enough for me to put a lot of money in M* models, because I like the research.
So again, my question is this–what’s different about you?
Well, I’ve agreed with much of that same sentiment above. But, maybe we should discuss this a different way? Could you share your experience with being a FA? I put in an application to become one at Merrill - they moved me to the next round and I’ve completed assessments. I’m supposed to go take a math test to demonstrate that I have what it takes to work with stocks.
I’m seriously starting to consider heading down the FA route.
FA route seems pretty chill
Well, let me first by saying that I haven’t quit my day job of being a tax accountant–nor will I until my business becomes self-sustaining. If you go the ML route, you won’t have this option. You will sink or you will swim.
Assuming that you can make it work at ML–you’ll have all your expenses paid by the company. Your e-mail, CRM, rebalancing & portfolio mgmt software, document management, etc. All paid by ML. Rent & utilities–paid by ML. Licenses, registrations, continuing ed, CFA fees–all paid by ML. But in return, you’ll get some pretty low payouts. I think they start at 32% and work their way up to 50%.
What I mean is this–if I have a $1m portolio and you charge a flat 1% to manage it, then you get $10,000 of gross compensation. If you’re at a 32% payout, that means you get to keep $3,200.
Once you get to where you’re managing $50m at 1%, then your payout will be, say, 45%. $50m x .01 x .45 = $225k, which is pretty comfy for most people not named Ohai. And you’re not really doing much work–your back office does all that for you. That’s why you pay them 55%. All you have to do is take them to lunch every quarter, play golf with them, and hem and haw about how good you’re doing at managing their money.
Downside - you’ll only eat what you kill, and even though $50m doesn’t sound like much, it’s really hard to get people to part with their current advisor. (As you can probably already tell.)
It doesn’t matter that you’re a CFA and the guy at Edward Jones is a HSD (high school dropout). It doesn’t matter that you have a bachelor’s in math and master’s in financial engineering. Honestly, your technical skills mean exactly jack sht. Soft skills are what gets people to part with their money. And I mean no offense, but it sounds like you’re lacking in that area. (Not that I’m any better.)
I took a look at the ML FADP. Looks pretty good. Do you think you will have to relocate if they bring you on?
No. Cherry Creek is a hop, skip, and a jump from my house. Currently, I work in downtown denver. . . which is the most nutsac twisting journey I make every single day.
Could I ask what is so good about the program?
Thanks for the insight greenman
Program is designed to help develop the right skills you’ll need to work as an advisor. Done over time, to help you refine and grow the skill set. Base pay, at least for the first 12 months to get you going. One on one coaching through each part of the program
I’m going to at least follow through with the math test then. I have a couple firms wanting interviews right now. Don’t know what my next move is, but it needs to be as close to 100K as possible. Which makes the advisor route seem like the wrong move.
^I seriously doubt that Merrill Lynch will pay $100k in salary to an entry-level financial advisor with no book of business.
Googling around, ML FA development salary is about $60k. I bet if someone gets the minimum a few years straight, they’ll throw them out
Well, there is no (explicit) cost to him finding out more information, making connections in the industry and so forth. Perhaps he gets more information now, maybe its just not the right fit (for right now). I looked at getting into this business at a younger age (~24) as I made a few contacts through some family connections, but just felt the timing wasn’t right. Ended up getting in at age 30 and here I am (almost) 10 years later.
I’ve seen development programs for advisors at the big banks in Canada, one was offering a base salary of $50k for a time period until you build up the book of clientele. The point is, you need a good program and mentors who are going to help guide you along as you learn how to manage money, financial planning etc.
Greenie - maybe you should look into this program. Not sure where your comp level is right now, but this could be an opportunity to actually move from accounting into WM (which is what I think you actually need to do, but that’s another conversation). You also made some good points on the grid payout for WM firms - but each firm will have a different grid and expenses covered, so it’s not a bad idea to compare the various broker dealers to gain an understanding of what costs are covered by the broker dealer and costs you are resopnsible for as well.
the chance of success as an advisor is low if you dont come from an affluent family. trust me. i used to sell cutco knives. only 12 percent of people who do the program succeed. shoot your shot. also i dont understand ppl who charge an hourly rate. if their account does not generate enough fees at 1 percent. then you prolly dont want to deal with them. charging them an hourly rate prolly hurts them more and does not add value.
Ya success rate probably around 20%-30% after five years. Bank hires 100 advisors to start into their program, after five years probably 20 - 30 advisors left.
What happens to the accounts the 70-80 who quit brought in? How do y’all reassign?
They would in most cases get transferred to another advisor within the same branch.
I’m not familiar with the resignation process - but I assume you have a discussion with the branch manager and registrations department to get the ball rolling. They may want you to speak to any existing clients you have to let them know you are transitioning out, and another advisor will be looking after you moving forward.